[SOUND] A fundamental question people ask when it comes to life insurance is why should I buy life insurance? Well, here's an interesting fact. One in three families had admitted that if something happened to their family's breadwinner, they would face a financial crisis within one month. Getting prepared can honestly be a lot easier than most people think. The six insights in this video can help you understand what is insurance, what can it provide? How can it help, how does it work, and when you should consider buying life insurance? With this baseline, hopefully you can start to assess your own situation. And make sure that you're not one of the one in three people that we mentioned above that would be in a financially tough situation in the event of a premature death. First, life insurance is financial support for the people that you care about. Just as car insurance pays you in the event that you have an accident, an injury or damage to your car, life insurance provides financial support for the people that you care about in the event of your death. Partners, children, and even elderly parents who depend on you financially will likely need some kind of safety net. Life insurance can provide you with the peace of mind that they have that financial support should you pass away. Here's something else to consider, debt doesn't disappear after your death. If you own any type of debt, for example student loans or a mortgage, that debt obligation may transfer over to your estate in the event of your death, which could impact any beneficiaries that you have financially. Life insurance could be helpful in that situation as a financial safety net to help them along. Number 2, life insurance can offer financial security. Typically, a life insurance contract, also referred to as a policy, will have the people that you care about designated as the beneficiaries. Also known as those who would be receiving a payout in the event of your death. This payout is generally a lump sum of money, which is usually paid in full and tax free. Payouts could be used by your beneficiaries in a number of different ways. The money can keep family members in their communities by going towards living costs like rent or even mortgage payments. Payouts can also help childcare or bring in domestic help, provide for college costs, some major expenses, things along those lines. In some cases payouts can be used for estate taxes that a family must pay in order to inherit assets or to settle any unpaid medical bills, taxes, or debt. The cost of the policy to you is called the premium, and that's usually a much, much smaller amount than what the payout would actually be. You can actually go in and estimate these costs by getting a quote online to see what it would cost for a certain death benefit amount. Number 3, term insurance can be simpler and more affordable. There are two main categories of life insurance, term life and permanent life. Term life provides coverage for a set period of time, referred to as the term or the policy duration, whereas permanent life insurance covers you for your entire life. The most well known type of permanent life insurance would be whole life or even universal life policies. These types of policies often have an investment component or savings component that are more complex and are usually more expensive than term life policies. Term life insurance policies only provide life insurance coverage for a set period of time that you choose when you apply and accept the policy, typically that's going to to be 10 to 30 years. Since they don't have the savings or investment component, they are typically going to be much simpler to understand and are usually far more affordable for the same amount of coverage. That fixed lower monthly payment and straightforward nature of how they're set up typically makes this the most affordable option for people to provide for their life insurance needs. Number 4, the amount of life insurance that you need is ultimately going to depend on you. You should always consider your unique financial situation when you decide how much life insurance that you need. You can talk to your significant other, if you have one, and go through the different options. Each of you should have a clear idea of who would need what. Remember, budgeting appropriately for the financial support required by a surviving spouse or partner or even your children is extremely important. Number 5, buying life insurance sooner rather than later can save you money. Here's the good news, being young and healthy generally puts you at a lower risk, which means that you have lower monthly payments. This is because broadly speaking life insurance is priced according to your overall health and how old you are when you buy it. So if you're in good health and you're younger, the cost would be lower, generally speaking. With some term life insurance policies you could also be locking in your price for a longer period of time when it's purchased. No matter what your status is in life, you may decide that you'd like to have a life insurance policy that can also be flexible. If that's something that's important to you, then you should really explore your options and figure out how you could change different policies over time, so that way it can adjust as your life progresses. Number 6, employer-based life insurance may not be enough for what you need. Many people are actually surprised to learn that the life insurance that's offered through their employer may only provide a small fixed amount or just one to two times their annual salary. That's usually not going to be enough to provide sustained financial support for your loved ones. Depending on your situation, it might be a good idea to explore taking out a second policy to ensure that your family is fully protected. Also, you consider the portability of any employer-offered life insurance policy to see if you'd be able to keep it if and when you do leave your job, or if it would be gone once you left your job. Just remember, your personal finances are completely personal. Not everyone out there needs life insurance right now, but you should understand why you might buy life insurance. If the insights that we talked about throughout this video made you pause and consider your own needs. Then take this as an opportunity to think about if you are going to be one of those people that need life insurance and how you may protect your loved ones. [SOUND]
